SF 893

as introduced - 80th Legislature (1997 - 1998) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to insurance; regulating exclusive agencies; 
  1.3             increasing civil penalties for violation of agent 
  1.4             rights; prohibiting enforcement of certain agreements 
  1.5             against terminated agents; requiring notice to policy 
  1.6             owners prior to transfer of an agent's book of 
  1.7             business; amending Minnesota Statutes 1996, sections 
  1.8             45.027, subdivision 6; 60A.172; and 72A.502, by adding 
  1.9             a subdivision. 
  1.10  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.11     Section 1.  Minnesota Statutes 1996, section 45.027, 
  1.12  subdivision 6, is amended to read: 
  1.13     Subd. 6.  [VIOLATIONS AND PENALTIES.] (a) The commissioner 
  1.14  may impose a civil penalty not to exceed $2,000 per violation 
  1.15  upon a person who violates any law, rule, or order related to 
  1.16  the duties and responsibilities entrusted to the commissioner 
  1.17  unless a different penalty is specified.  
  1.18     (b) Unless a different penalty is specified, the 
  1.19  commissioner may impose a civil penalty not to exceed $10,000 
  1.20  per violation upon an insurance company that violates any law, 
  1.21  rule, or order related to the rights of an insurance agent who 
  1.22  writes 80 percent or more of the agent's gross annual insurance 
  1.23  business for one company or any or all of its subsidiaries, and 
  1.24  is not in the direct employ of the company. 
  1.25     Sec. 2. Minnesota Statutes 1996, section 60A.172, is 
  1.26  amended to read: 
  1.27     60A.172 [INSURANCE AGENCY CONTRACTS; CANCELLATION.] 
  2.1      Subdivision 1.  [CANCELLATION.] (a) An insurer may not 
  2.2   cancel a written agreement with an agent or reduce or restrict 
  2.3   an agent's underwriting authority with respect to property or 
  2.4   casualty insurance, based solely on the loss ratio experience on 
  2.5   that agent's book of business, if:  the insurer required the 
  2.6   agent to submit the application for underwriting approval, all 
  2.7   material information on the application was fully completed, and 
  2.8   the agent has not omitted or altered any information provided by 
  2.9   the applicant. 
  2.10     (b) For purposes of this section, "loss ratio experience" 
  2.11  means the ratio of claims paid divided by the premiums paid. 
  2.12     (c) This section applies only to agents who write 80 
  2.13  percent or more of their gross annual insurance business for one 
  2.14  company or any or all of its subsidiaries, and are not in the 
  2.15  direct employ of the company. 
  2.16     Subd. 2.  [NONCOMPETE AGREEMENTS.] A company is prohibited 
  2.17  from enforcing against an agent an agreement that restricts 
  2.18  communication with or sale of insurance to customers of the 
  2.19  agent upon termination of an agency by the insurance company.  
  2.20  This subdivision does not apply when the agent is terminated for 
  2.21  insolvency, abandonment, gross and willful misconduct, or 
  2.22  failure to pay over to the company money due to the company 
  2.23  after receipt by the agent of a written demand for payment, or 
  2.24  after revocation of the agent's license by the commissioner of 
  2.25  commerce. 
  2.26     Sec. 3.  Minnesota Statutes 1996, section 72A.502, is 
  2.27  amended by adding a subdivision to read: 
  2.28     Subd. 11b.  [AGENCY TERMINATION.] Notwithstanding 
  2.29  subdivision 11a, an insurer shall give 14 days' prior written 
  2.30  notice to affected policy owners before terminating an agency 
  2.31  contract that is subject to section 60A.172. 
  2.32     Sec. 4.  [EFFECTIVE DATE.] 
  2.33     This act is effective the day following final enactment and 
  2.34  applies to contracts or agreements entered into, or modified or 
  2.35  amended, on or after that date.  This act also applies to an 
  2.36  agent whose license is renewed on or after that date.